Argo Blockchain faces class action lawsuit over mining capacity from US investors

Bitcoin miner Argo Blockchain allegedly failed to disclose it was facing technical difficulties and made misleading statements when is offered shares to the U.S. financial market, according to a class action lawsuit filed against the company in New York. 

Argo did not disclose it was suffering “significant capital constraints, electricity and other costs, and network difficulties” while making its initial public offering of American depositary shares in 2021, according to the suit filed on Thursday to the U.S. District Court for the Eastern District of New York.

“Had [investors] known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid,” lawyers for the plaintiff argued.

Specifically, they claim Argo’s Texas mining facility Helios was prone to issues in its ability to mine bitcoin and deliver to the company’s business requirements, leading to Argos’s prospects for success to be “overstated.”

The Helios facility was sold to Galaxy Digital for $65 million last month, and Argo received an additional $35 million loan. The sale comes amid turmoil in the mining sector, which has faced higher energy costs, lower bitcoin prices and a slump in the value of equipment. Recently, Core Scientific’s filed for Chapter 11 bankruptcy, one of several companies to do so.

Argo did not immediately respond to a request for comment.